Correlation Between RBC Quant and Manulife Smart

Can any of the company-specific risk be diversified away by investing in both RBC Quant and Manulife Smart at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RBC Quant and Manulife Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RBC Quant Dividend and Manulife Smart Dividend, you can compare the effects of market volatilities on RBC Quant and Manulife Smart and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RBC Quant with a short position of Manulife Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of RBC Quant and Manulife Smart.

Diversification Opportunities for RBC Quant and Manulife Smart

0.34

Correlation Coefficient

RBC Quant  Manulife Smart

Weak diversification

The 3 months correlation between RBC and Manulife is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding RBC Quant Dividend and Manulife Smart Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Smart Dividend and RBC Quant is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RBC Quant Dividend are associated (or correlated) with Manulife Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Smart Dividend has no effect on the direction of RBC Quant i.e., RBC Quant and Manulife Smart go up and down completely randomly.

Pair Corralation between RBC Quant and Manulife Smart

Assuming the 90 days trading horizon RBC Quant Dividend is expected to under-perform the Manulife Smart. In addition to that, RBC Quant is 1.16 times more volatile than Manulife Smart Dividend. It trades about -0.1 of its total potential returns per unit of risk. Manulife Smart Dividend is currently generating about -0.07 per unit of volatility. If you would invest  1,309  in Manulife Smart Dividend on December 30, 2024 and sell it today you would lose (49.00) from holding Manulife Smart Dividend or give up 3.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

RBC Quant Dividend  vs.  Manulife Smart Dividend

RBC Quant Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days RBC Quant Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, RBC Quant is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Manulife Smart Dividend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manulife Smart Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Manulife Smart is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RBC Quant and Manulife Smart

The main advantage of trading using opposite RBC Quant and Manulife Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Quant position performs unexpectedly, Manulife Smart can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Manulife Smart will offset losses from the drop in Manulife Smart's long position.

The idea behind RBC Quant Dividend and Manulife Smart Dividend pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.